FINANCIAL REFORM IN KWADUKUZA MUNICIPALITY
4.5 PROGRAMME FOR THE EFFECTIVE IMPLEMENTATION OF THE COUNCIL’S
The rating of certain areas was investigated, and an informed decision was taken to de- rate such areas and grant a tax holiday for a period of eight years as prescribed by the Rates Policy. A report for consideration was submitted to the Council by the Executive Committee on 17 November 2004 (KwaDukuza Municipality Internal Memorandum:
Reversal of Rates – Land Reform Properties. Item Fin:72 dated 22/06/2006).
The Housing Operating account was properly balanced off and reconciled with the preparation of the 2003/2004 financial statements. Full working papers to this effect were made available to audit (KwaDukuza Municipality Internal Memorandum: Housing Debt. Item Fin:03 dated 24/01/2006).
4.5 PROGRAMME FOR THE EFFECTIVE
4.5.2 Indigent support
Implementation considered reviewing the threshold of R1300. The old-age pension was more than R700 and therefore the threshold was lifted to R1600 in tandem with Social Security Grants (KwaDukuza Municipality Internal Memorandum: Debt Collection Task Team – Prepaid Vending. Item Fin: 68 dated 14/06/2005).
4.5.3 Monthly payment of rates
A policy to encourage monthly payment of rates was drawn up with a clear implementation strategy. Current annual ratepayers willing to convert to a monthly rate could be encouraged to make part payments as long as the arrangements would not interfere with the existing policy.(KwaDukuza Municipality Internal Memorandum:
Valuation Roll Report. Item:C628 dated 05/10/2005).
4.5.4 Debt collection task team
The multi-task team comprising representatives from diverse backgrounds was appointed in terms of a council resolution to vigorously drive debt collection efforts. The team met on a weekly basis to review progress and set programmes and tasks for each week (KwaDukuza Municipality Internal Memorandum: Debt Collection Task Team – Prepaid Vending. Item Fin: 68 dated 14/06/2005).
4.5.5 Revenue enhancement and debt recovery plan
Council implemented an aggressive recovery plan which targeted the following areas:
(a) undertake vigorous disconnection for non-payment of services;
(b) conduct disconnections for all accounts older than 90 days;
(c) collect monies owed by state/and other state agencies to the total of R1,5m;
(d) recover monies owed by the Ilembe District Municipality in respect of water to the total value of R16m;
(e) review investments and external loans to the estimated value of R22m;
(f) vigorously implement measures contained in the credit control policy;
(g) pursue consolidation/distribution agreements with major creditors;
(h) review operating and capital budgets;
(I) review asset policy with a view to unbundling assets;
(j) review Value Added Tax;
(k) review the current tariff structure;
(l) review the billing cycle; and
(m) acquire electronic meter reading equipment
(KwaDukuza Municipality Internal Memorandum: Debt Collection Task Team – Prepaid Vending. Item Fin: 68 dated 14/06/2005)
4.5.6 Public awareness
The implementation of certain aspects of the policy required a public awareness campaign. Where Council felt such was required, appropriate awareness initiatives were implemented such as an Izimbizo, newspapers adverts and pamphlets (KwaDukuza Municipality Internal Memorandum: Debt Collection Task Team – Prepaid Vending.
Item Fin: 68 dated 14/06/2005).
4.5.7 Submission of the Annual Financial Statements for 2003/4
In terms of existing legislation, Council should have completed the 2003/2004 financial statements and submitted them to the Office of the Auditor-General by 30 September 2004. Owing to the nature of the problems as highlighted by the Auditor-General during the 2002/2003 audit, it was not possible to comply with that deadline. In order to place the financial records of Council on a reliable footing, it was crucially necessary for the focus to shift from deadline-driven to quality-driven. As a natural consequence of that philosophy, the date of completion of the 2003/2004 annual financial statements was set
for 31 December 2004. It must also be stressed that the extension was a one-off event.
With a clean set of records and a firm foundation at their disposal, finance managers could better function to the benefit of the municipality (KwaDukuza Municipality Internal Memorandum: Management Assistance Programme . Item: C540 dated 07/09/2005).
4.5.8 Restructuring the Department of Finance
Apart from the issue of Annual Financial Statements, institutional arrangements were undertaken to ensure that the structure (organogram) and processes within the Department of Finance were correctly aligned to enable officials to carry out their respective responsibilities (KwaDukuza Municipality Internal Memorandum:
Management Assistance Programme . Item: C540 dated 07/09/2005).
Further to that, one of the single most serious impediments to the compilation of a financial statement, that of an accurate or fair representation of the financial position of the Municipality, was the absence of a balanced, consolidated, correctly valuated and verified asset register. The project was vigorously pursued with the assistance of a firm of accountants.
The above basically sums up the reasons for the inability by the municipality to submit annual financial statements as prescribed. It is a concise report on what efforts were made to rectify the situation. In short it was accepted that a quick-fix solution was not desirable since most of the problems were historical and materially affected key financial disclosures and accounting requirements. Hence the decision to adopt an approach to sort out the fundamental issues at once so that reliable and fair annual financial statements could be produced in going forward (KwaDukuza Municipality Internal Memorandum:
Management Assistance Programme. Item: C540 dated 07/09/2005).
The issue of organizational re-engineering was also addressed by way of reviewing the organogram and internal business processes and systems. Another pertinent issue was the filling of posts subject to outcomes of the review of the departmental organogram and the capacity-building programme (KwaDukuza Municipality Internal Memorandum:
Organogram for the Municipalities. Item: Fin 77 dated 22/06/2006).